There are a lot of China-focused hedge funds, but there are not any truly Chinese hedge funds. That is about the change as a pair of Chinese asset managers prepare to launch the country’s first genuine hedge funds.
Chinese regulators in July eased restrictions on asset managers’ trading of index futures, giving the green light to launch separately-managed account products aimed at high-net-worth investors. The first firm to walk through that new door will be E Fund Management, which plans to launch China’s first officially-registered hedge fund.
E Fund, China’s second-largest asset manager, says its product will be the first institutional hedge fund in China, targeted a China’s growing population of millionaires, which now number nearly a half-milllion. The firm has already applied to the China Securities Regulatory Commission with details about the fund, although the CSRC said it will essentially not regulate hedge funds.
In a statement, E Fund said its new hedge fund will “seek to hedge market risk through stock index futures and other tools.”
“Separately managed accounts at asset management companies now are in the position to operate in the way hedge funds in developed markets do with the same strategies at their disposal,” Liu Zhen, a former Brevan Howard Asset Management and D.E. Shaw Group portfolio manager who serves as E Fund’s managing director for index and quantitative investments, told Bloomberg News of the regulatory changes.
E Fund isn’t the only firm planning to enter the new Chinese hedge fund market. China Southern Fund Management is also working to launch one, Bloomberg reports.
According to Liu, E Fund’s hedge fund will charge “2-20 like” fees.